Thursday, July 07, 2016

It might seem impertinent, but at a time when media companies are
battered by powerful external forces – changes in consumer behaviour,
competition, technologies, legislation and even post-Brexit economic
blues – it’s perhaps not unreasonable to ask: Can media executives
really do anything to ensure their firms succeed?

We combined, cleaned and combed through nearly 1,500 responses and
500,000 data points from the 20-question survey completed by news media
executives in senior, editorial, commercial and technology roles across
national and regional operations in 59 countries.

The answer, we learned, is: Yes!

In fact there are several statistically significant differences
between the priorities of executives at firms that report substantial
profits (up 20% +) and the priorities of those at companies with
significant losses (down 20%+).

One of those, you might not be too surprised to hear, was their
attitudes towards technology. Up to 2014, companies that prioritised
investment in old technologies (e.g., printing technology and pre-press
technology) were almost twice as likely to have reported a significant drop (more than 20%) in revenue over the past year.

Conversely, companies that prioritised investment in new
technologies (e.g., paid-for digital content, mobile, tablet and ipad
technologies) were more than one and half times more likely to report significant increases (more than 20%) in revenue over the previous year.

But that is changing. By 2015, however, this trend was no longer
statistically significant. That suggests that even if investment in
technology remains important, it may no longer differentiates winners
from losers.

So, this year’s study is going to be crucial to see the roles that
technologies - and other factors such as strategy, talent and
organisational culture - play in corporate success.

If you’re a senior decision-maker at a news media organisation and
would like to know more about what we find, you can get a free copy of
the report summary (and an invitation to a WAN-IFRA webinar) by taking
up WAN-IFRA CEO Vincent Peyrègne's recent invitation to participate in the study which is now open HERE.

Wednesday, January 27, 2016

Yes,
our 7th annual World Newsmedia Innovation Study surveyed
decision-makers in 10 languages in 50 countries. And it's true that even our new summary report is packed with fascinating insights
into the current performance and future priorities of firms
on all continents. So,
you might have thought it would be difficult for me to pinpoint one issue that
is on the top of the agenda of most innovating news organisations. It
wasn’t. With
8 of 10 respondents reporting that print advertising was down or flat
over the previous 12 months, the pressing issue amongst the majority of publishers is this: What to do about advertising? Or, more specifically,
what can be done to get a substantial share of the growing digital
adspend that PwC forecasts will account for 38.7 percent of total global
advertising revenue in 2019, up from just 16.6 percent in 2010? Before
I talk about how senior executives are answering that question, it
might be worth recalling the four key challenges news firms face in
this area: the intense competition from digital pure play
advertising-supported firms such as Facebook, Google and Twitter; the
possibility that digital advertising exchanges will drive down the
market price of their inventory and take a larger slice of the revenue;
the proliferation of ad-blocking software; and the preference that key
advertising agencies have for buying digital audiences at scale wherever
they may roam online, rather than buying advertising space in the
context of specific content, which is key to media’s traditional value
proposition.

PERFORMANCE: Where did the money come from over the last finacial year?

I
recently shared the stage at a Westminster Media Forum with Maxus UK
chief executive Nick Baughan, who pulled no punches: “I’m an ad buyer, I
like numbers; I like easy ways to access numbers and I like homogenous
category with which I can deal with.”Baughan
said he estimates his company, part of WPP’s media investment arm Group
M, represents about 30 to 40 percent of the total advertising market
across all media in the United Kingdom and “roughly similar” numbers
globally. “We go to where scale is; so for media agencies like ours it’s
all about Facebook because that’s where the scale is, not because
Facebook is a great community area or whatever it is, it’s because
that’s where the numbers are. Now the problem with that is, is you are
clearly then sacrificing some of your editorial context for the numbers
that go with Facebook and that’s just a decision that we’re all going to
kind of have to make in life.” Of
course, news publishers won’t give up on the digital or print
advertising opportunities easily. What to do about it? Whatever else
this year’s study results show, this much is clear: There is no
one-size-fits-all approach to future news media business models. I’ve
identified three broad strategic mindsets emerging amongst publishers. I
like to think of them as the Guards, the Rangers and the Pioneers.

The
Guards are those who doggedly defend their traditional business model
and are expecting at least 90 percent of their future profits to come
from advertising and content sales. About one in 10 of the respondents
fall into that category. Meanwhile, more than a third of the respondents
(33.8 percent) say 10 percent or less of their income comes from
alternative sources; only a tenth of the respondents expect that to be
the case in the next five years.

PROSPECTS: What are executives prioritising for investment?

The
Rangers are those who are doing all they can to protect their current
businesses, but are also working towards to earning up to half their
income from alternative sources. The majority of this year’s study
participants might be described that way. Almost 70 percent say they
expect that their company will need to earn more than 10 and up to 50
percent of their incomes from different sources in the next five years.

Then
there are the Pioneers. They are not only seeking out a variety of new
revenue streams, but they’re expecting that their companies will have to
earn more than half their income from sources other than traditional
advertising and content sales to meet their revenue targets. Two out of
every 10 of this year’s respondents can be defined as Pioneers, a third
of whom (7.1 percent) say that they anticipate their companies will need
to draw more than 70 percent of their revenues from sources other than
traditional advertising and content sales. These findings invite
a variety of further questions. Those media executives who might be
described as Guards and are banking on advertising for the bulk of their
incomes in the longer term, might want to ask themselves why nine out
of 10 of their peers have made a different assessment about what would
be required for longer term success? The Rangers are likely to be asking
themselves how do executive teams straddle the twin challenges of
identifying new ancillary opportunities and exploiting current
activities without losing focus? The Pioneers, who are stepping over the
line into new business territory and expect to settle there, are likely
to be questioning whether to keep hold of their news media assets at
all.

The need for business focus was the primary reason
Pearson’s chief executive John Fallon gave when the publishing and
education company first sold its 50 percent stake in the Financial Times
in July 2015 and then a month later dispersed of its 50 percent share
in The Economist.

“Pearson is proud to have been a part of the
Economist's success over the past 58 years, and our shareholders have
benefited greatly from its growth,” Fallon said in a company statement
at the time. “Pearson is now 100 percent focused on our global education
strategy.”

The issue of business focus is increasingly
important, particularly as rapidly emerging technologies continue to
challenge existing operations and open up an array of new opportunities.
More than 38 percent of respondents in this year’s study say their
companies are prioritising developing new digital products that extend
their current brands over the coming year, while 24 percent say their
companies are looking to invest in non-media businesses.

Perhaps
the key question for newsmedia boardrooms is this: Do we diversify, or
do we specialise? On the one hand, there are risks associated with
having all one’s eggs in a single basket. On the other hand, there is
also the risk of becoming a jack of all trades and master of none. To
answer that question, senior leaders need to be absolutely frank about
what the company’s core competence is at present and what partnerships
they need to forge to grow.

The World Newsmedia Innovation
Study 2015 was conducted by Dr François Nelof the University of Central
Lancashire in collaboration with the World Newsmedia Network. The project is made possible through collaboration with a variety of academic and industry partners, including: Dr Coral Millburn-Curtis of Green Templeton College, University of Oxford; Emma Urjasova; Dr Katja Lehtisaari of the University of Helsinki; Dr Datis Khajeheian of Aalborg University; Ali Alrowaili of the University of Central Lancashire; Dr Oscar Westlund of the University of Gothenburg; Global Editors Network; Digital Editors Network, UK. We welcome queries from other potential industry and academic collaborators, who can contact the study leader at FPNel @ uclan.ac.uk The
summary report has been published in the Global Digital Media Trendbook
2015 edited by Martha Stone. Copies are free to download HERE.